PROSPECTUS: JANUARY 31, 1999
AS REVISED JUNE 1, 1999
[GRAPHIC APPEARS HERE]
BT Mutual Funds
CAPITAL APPRECIATION FUND
With the goal of achieving long-term capital growth,
primarily through investment in stocks and other equity
securities of medium-sized U.S. companies with strong growth
potential
TRUST: BT INVESTMENT FUNDS
INVESTMENT ADVISER: BANKERS TRUST COMPANY
[Like shares of all mutual funds, these securities have not
been approved or disapproved by the Securities and Exchange
Commission nor has the Securities and Exchange Commission
passed upon the accuracy or adequacy of this prospectus. Any
representation to the contrary is a criminal offense.]
<PAGE>
<PAGE>
OVERVIEW
of the Capital Appreciation Fund
Goal: The Fund invests for long-term capital growth.
Core Strategy: The Fund invests primarily in the stocks and other
equity securities of medium-sized U.S. companies with strong
growth potential.
Capital Appreciation Fund
OVERVIEW OF THE CAPITAL APPRECIATION FUND
3 Goal
3 Core Strategy
3 Investment Policies and Strategies
4 Principal Risks of Investing in the Fund
4 Who Should Consider Investing in the Fund
5 Total Returns, After Fees and Expenses
6 Annual Fund Operating Expenses
A DETAILED LOOK AT THE CAPITAL APPRECIATION FUND
7 Objective
7 Strategy
7 Principal Investments
7 Investment Process
8 Risks
8 Management of the Fund
9 Calculating the Fund's Share Price
10 Performance Information
10 Dividends and Distributions
10 Tax Considerations
10 Buying and Selling Fund Shares
11 Financial Highlights
INVESTMENT POLICIES AND STRATEGIES
The Fund invests all of its assets in a master portfolio with the same
investment objective of the Fund. The Fund, through the master portfolio, seeks
to achieve that objective by investing in stocks and other equity securities.
The Fund's research team searches for medium-sized companies with strong growth
prospects. Companies are selected based on factors such as the company's
business prospects, its record of earnings growth and its stock price relative
to industry peers.
3
<PAGE>
Overview of the Capital Appreciation Fund
PRINCIPAL RISKS OF INVESTING IN THE FUND
An investment in the Fund could lose money, or the Fund's performance could
trail that of other investments. For example:
- - Stocks that the Investment Adviser has selected could perform poorly;
- - Medium-sized company stock returns could trail stock market returns generally
because of risks specific to medium-sized company investing, i.e., greater share
price volatility and fewer buyers for medium-sized company shares in periods of
economic or stock market stress. Such risks may hurt the prices of the stocks in
the Fund's portfolio and limit the Fund's ability to exit from an unsuccessful
investment; or
- - The stock market could decline, or could underperform other types of
investments.
WHO SHOULD CONSIDER INVESTING IN THE FUND
You should consider investing in the Capital Appreciation Fund if you are
seeking long-term capital growth. There is, of course, no guarantee that the
Fund will realize its goal. Moreover, you should be willing to accept greater
short-term fluctuations in the value of your investment than you would typically
experience investing in certain bonds or money market funds.
You should not consider investing in the Capital Appreciation Fund if you are
pursuing a short-term financial goal, if you seek regular income or if you
cannot tolerate fluctuations in the value of your investments.
The Fund by itself does not constitute a balanced investment program. It can,
however, afford you exposure to investment opportunities not available to
someone who invests in established large company stocks or small company stocks.
An investment in the Capital Appreciation Fund is not a deposit of Bankers Trust
Company or any other bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
4
<PAGE>
Overview of the Capital Appreciation Fund
Year-by-Year Returns
(each full calendar year since inception)
[GRAPH APPEARS HERE]
0
3.24%
1994
37.43%
1995
8.68%
1996
14.46%
1997
18.51%
1998
Since inception, the Fund's highest return in any calendar quarter was 27.67%
and its lowest quarterly return was -19.58%. Past performance offers no
indication of how the Fund will perform in the future.
TOTAL RETURNS, AFTER FEES AND EXPENSES
The bar chart and table on this page can help you evaluate the potential risk
and rewards of investing in the Fund by showing changes in the Fund's
performance year to year. The bar chart shows the Fund's actual return for each
full calendar year since the Fund began selling shares on March 9, 1993 (its
inception date). The table compares the Fund's average annual return with the
S&P Mid-Cap 400 Index over the last one and five years, and since inception.
The Index is a passive measure of stock performance. It does not factor in the
costs of buying, selling and holding stocks -- costs which are reflected in the
Fund's results.
- --------------------------------------
The S&P Mid-Cap 400 Index is a widely accepted benchmark of medium-sized company
performance. The Index is a model, not an actual portfolio, that tracks the
performance of 400 publicly held medium-sized U.S. companies. The weighted
average market cap for the companies in the Index was approximately $9 billion
as of December 31, 1998. That compares to $88 billion for the companies in the
S&P 500, a corresponding large company benchmark.
Average Annual Returns
(as of December 31, 1998)
<TABLE>
<CAPTION>
Since Inception
1 year 5 years (March 9, 1993)*
----------- ----------- -----------------
<S> <C> <C> <C>
Capital Appreciation Fund 18.51% 15.90% 16.68%
- --------------------------- ----- ----- -----
S&P Mid-Cap 400 Index 18.25% 18.67% 17.83%
- --------------------------- ----- ----- -----
</TABLE>
*The S&P Mid-Cap 400 Index is calculated from February 28, 1993.
5
<PAGE>
Overview of the Capital Appreciation Fund
ANNUAL FUND OPERATING EXPENSES
(expenses paid from Fund assets)
The Annual Fees and Expenses table to the right describes the fees and expenses
you may pay if you buy and hold shares of the Capital Appreciation Fund.
Expense Example. The example below illustrates the expenses you would have
incurred on a $10,000 investment in the Fund. The numbers assume that the Fund
earned an annual return of 5% over the periods shown, the Fund's operating
expenses remained the same over the period shown and that you sold your shares
at the end of the period.
You may use this hypothetical example to compare the Fund's expense history with
other funds. Your actual costs may be higher or lower.
(1) Information on the annual operating expenses of both the Fund and Capital
Appreciation Portfolio, the master fund in which the Capital Appreciation
Fund invests. (A further discussion of the relationship between the Fund and
the Portfolio appears in the "Organizational Structure" Section of this
prospectus.)
(2) Bankers Trust has agreed, for the 16-month period from the Fund's fiscal
year end of September 30, 1998, to waive its fees and reimburse expenses so
that total expenses will not exceed 1.25%.
(3) Based on expenses, after fee waivers and reimbursements for the first 16
months only.
Annual Fees and Expenses
<TABLE>
<CAPTION>
Percentage of Average
Daily Net Assets(1)
-----------------------------
<S> <C>
Management Fees 0.65%
- --------------------------------------- -----
Distribution and Service (12b-1) Fees none
- --------------------------------------- -----
Other Fund Operating Expenses 0.99%
- --------------------------------------- -----
Total Fund Operating Expenses 1.64%(2)
- --------------------------------------- -------
Less: Fee Waivers or Expense
Reimbursement (0.39)%
- --------------------------------------- -------
Net Expenses 1.25%
- --------------------------------------- ---------
</TABLE>
<TABLE>
<CAPTION>
Expense Example(3)
1 year 3 years 5 years 10 years
-------- --------- --------- ---------
<S> <C> <C> <C> <C>
$127 $477 $867 $1,962
</TABLE>
6
<PAGE>
A DETAILED LOOK
at the Capital Appreciation Fund
OBJECTIVE
The Capital Appreciation Fund seeks long-term capital growth. The Fund invests
the majority of its assets in the stock and other securities with equity
characteristics of medium-sized U.S. companies. We believe these companies
contain the greatest concentration of businesses with significant growth
prospects. Thus, the Fund invests primarily in companies whose market
capitalization falls in the market capitalization range of the S&P Mid-Cap 400
Index at the time it first purchases the shares. To a lesser extent, the Fund
may also invest in companies outside the United States that meet its investment
criteria.
The Fund invests for long-term capital growth, not income; any dividend and
interest income is secondary to the pursuit of its objective. While we give
priority to long-term capital growth, we cannot offer any assurance of achieving
our objective. The Fund's objective is not a fundamental policy. We must notify
shareholders before we change it, but we do not require their approval to do so.
STRATEGY
We pursue a flexible investment program to achieve the Fund's objective. We are
not restricted to investments in specific market sectors. We may invest in any
market sector and in any size company if we have identified an opportunity with
attractive long-term prospects for capital growth. Nevertheless, we attempt to
match the dollar-weighted average capitalization of the Fund's holdings to the
midpoint capitalization of the S&P Mid-Cap 400 Index.
We consider many broad factors in assessing a potential candidate for
investment, including generally:
- - competitive position within its industry
- - business prospects
- - management team
- - record of earnings growth
- - underlying asset value relative to industry peers
- - stock price relative to industry peers
- - whether a reliable and liquid market for its shares exists.
- --------------------------------------------------------------------------------
"Market Capitalization," or "Market Cap," provides a ready gauge of a company's
size. It multiplies the total number of a company's outstanding shares by the
current price of its stock.
PRINCIPAL INVESTMENTS
The Fund normally owns stock in approximately 100 medium-sized companies at any
one time. It focuses primarily in stock and other securities with equity
characteristics such as trust or limited partnership interests, rights and
warrants. It may also invest in convertible securities when it is more
advantageous than investing in a company's common stock.
The Fund may also invest up to 25% of its assets in stocks and other securities
of companies based outside the United States. Under normal conditions, this
tactic would not comprise a major element of its strategy.
INVESTMENT PROCESS
The Fund's process begins with a methodical search for companies (in any
industry) that show attractive long-term prospects for growth. The research
team relies on information gleaned from a variety of sources and perspectives,
including broad trends such as lifestyle and technological changes, industry
cycles and regulatory changes, quantitative screening and individual company
analysis. Companies are screened to identify those with strong business
fundamentals (i.e., high growth, low debt, high return-on-equity) and technical
strength. Measures of this strength include the extent of management's
ownership of a company's shares, the extent of ownership by mutual funds and
other large professional investors, estimates of future earnings by investment
analysts who follow the stock and the extent that actual earnings have deviated
from analysts' estimates in the recent past. The list of candidates is narrowed
through meetings with company and industry contacts, attendance at conferences
focusing on emerging growth companies, reviews of research and industry
publications and investment analyst contacts.
- --------------------------------------------------------------------------------
A right is a privilege granted to existing shareholders of a company to
subscribe to shares of a new issue of common stock below the public offering
price before it is offered to the public.
A warrant entitles the holder to buy a certain amount of common stock at a
specified price, usually higher than the market price at the time the Warrant
was issued, within a set time period.
Convertible Securities are bonds that give purchasers the right of exchange for
a specified number of shares of a company's common stock at specified prices
within a certain period of time. Purchasers receive regular interest payments
until they exercise their exchange right.
Portfolio Turnover. The portfolio turnover rate measures the frequency that the
Portfolio sells and replaces the securities it holds within a given period.
Historically, this Fund has had a high portfolio turnover rate. High turnover
can increase the Fund's transaction costs, thereby lowering its returns. It may
also increase your tax liability.
7
<PAGE>
A Detailed Look at the Capital Appreciation Fund
RISKS
Below we set forth some of the prominent risks associated with mid cap
investing, as well as investing in general, and we detail our approaches to
containing them. Although we attempt to assess the likelihood that these risks
may actually occur and to limit them, we make no guarantee that we will succeed.
Primary Risk
Market Risk. Although individual stocks can outperform their local markets,
deteriorating market conditions might cause an overall weakness in the stock
prices of the entire market.
Stock Selection Risk. A risk that pervades all investing is the risk that the
securities an investor has selected will not perform to expectations. The Fund
follows a disciplined selling process to try to lessen this market risk. First,
we may sell a security if one or more of the following conditions take place:
- - There is a material change in the company's fundamentals;
- - The stock underperforms its industry peer group by 15% or more; or
- - The stock price reaches our expectation.
Medium-Sized Company Risk. Medium-sized company stocks tend to experience
steeper fluctuations in price -- down as well as up -- than the stocks of larger
companies. A shortage of reliable information -- the same information gap that
creates opportunity -- can pose added risk. Industry-wide reversals have had a
greater impact on them, since they usually lack a large company's financial
resources. Medium-sized company stocks are typically less liquid than large
company stocks: when things are going poorly for a medium-sized company, it is
harder to find a buyer for its shares.
Foreign Investment Risk. To the extent that the Fund holds companies based
outside the United States, it faces the risks inherent in foreign investing.
Adverse political, economic or social developments could undermine the value of
the Fund's investments or prevent the Fund from realizing their full value.
Accounting and financial reporting standards differ from those in the U.S. and
could convey incomplete information when compared to information typically
provided by U.S. companies. Finally, the currency of the country in which the
Fund has invested could decline relative to the value of the U.S. dollar, which
would depreciate the value of an investment itself to U.S. investors.
Secondary Risk
Pricing Risk.When price quotations for securities are not readily available, we
determine their value by the method that most accurately reflects their current
worth in the judgement of the Board of Trustees. This procedure implies an
unavoidable risk, the risk that our prices are higher or lower than the prices
that the securities might actually command if we sold them. If we have valued
the securities too highly, you may end up paying too much for Fund shares when
you buy. If we underestimate their price, you may not receive the full market
value for your Fund shares when you sell.
Year 2000 Risk. As with most businesses, the Fund faces the risk that the
computer systems of its Investment Adviser and other companies on which it
relies for service or in which it invests will not accommodate the changeovers
necessary from dates in the year 1999 to dates in the year 2000. These risks
could adversely affect:
- - The companies in which the Fund invests, which could impact the value of the
Fund's investments;
- - Our ability to service your Fund account, including our ability to meet your
requests to buy and sell Fund shares; and
- - Our ability to trade securities held by the Fund or to accurately price
securities held by the Fund.
We are working both internally and with our business partners and service
providers to address this problem. If we -- or our business partners, service
providers, government agencies or other market participants -- do not succeed,
it could materially affect shareholder services or the value of the Fund's
shares.
Temporary Defensive Position. For temporary defensive purposes, we may invest up
to 100% of the Fund's assets in the common stock of larger companies, in
fixed-income securities, or short-term money market securities. To the extent we
find it necessary to invest in such securities, the Fund may not meet its goal
of long-term capital growth.
MANAGEMENT OF THE FUND
Board of Trustees. The Fund's shareholders, voting in proportion to the number
of shares each owns, elects a Board of Trustees, and the Trustees supervise all
of the Fund's activities on their behalf.
Investment Adviser. Under the supervision of the Board of Trustees, Bankers
Trust Company, with headquarters at 130 Liberty Street, New York, NY 10006, acts
as the Fund's investment adviser. As investment adviser, Bankers Trust makes the
Fund's investment decisions and assumes responsibility for the securities the
Fund owns. It buys and sells securities for the Fund and conducts the research
that leads to the purchase and sale decisions. For its services in the last
fiscal year, Bankers Trust received a fee from the Capital Appreciation Fund of
0.65% of its average daily net assets.
As of December 31, 1998, Bankers Trust was the eighth largest bank holding
company in the United States with total assets of approximately $156 billion.
Bankers Trust is a worldwide merchant bank dedicated to servicing the needs of
corporations,
8
<PAGE>
A Detailed Look at the Capital Appreciation Fund
governments, financial institutions and private clients through a global network
of over 96 offices in more than 43 countries.
Bankers Trust's officers bring wide experience to managing both the Fund and its
Portfolio. The firm's own record dates back to its founding as a trust company
in 1903. It has invested retirement assets on behalf of the nation's largest
corporations and institutions for more than 50 years. Today, the assets under
its global management exceed $338 billion. The scope of the firm's capability is
broad: It is a leader in both the active and passive quantitative investment
disciplines and maintains a major presence in stock and bond markets worldwide.
On March 11, 1999, Bankers Trust announced that it had reached an agreement with
the United States Attorney's Office in the Southern District of New York to
resolve an investigation concerning inappropriate transfers of unclaimed funds
and related record-keeping problems that occurred between 1994 and early 1996.
Pursuant to its agreement with the U.S. Attorney's Office, Bankers Trust pleaded
guilty to misstating entries in the bank's books and records and agreed to pay a
$60 million fine to federal authorities. Separately, Bankers Trust agreed to pay
a $3.5 million fine to the State of New York. The events leading up to the
guilty pleas did not arise out of the investment advisory or mutual fund
management activities of Bankers Trust or its affiliates.
As a result of the plea, absent an order from the SEC, Bankers Trust would not
be able to continue to provide investment advisory services to the Fund. The SEC
has granted a temporary order to permit Bankers Trust and its affiliates to
continue to provide investment advisory services to registered investment
companies. There is no assurance that the SEC will grant a permanent order.
The Investment Adviser is a wholly owned subsidiary of Bankers Trust
Corporation. On November 30, 1998, Bankers Trust Corporation entered into an
Agreement and Plan of Merger with Deutsche Bank AG under which Bankers Trust
Corporation would merge with and into a subsidiary of Deutsche Bank AG. Deutsche
Bank AG is a major global banking institution that is engaged in a wide range of
financial services, including investment management, mutual funds, retail and
commercial banking, investment banking and insurance. The transaction is
contingent upon various regulatory approvals, and continuation of the Fund's
advisory relationship with Bankers Trust thereafter is subject to the approval
of Fund shareholders. If the transaction is approved and completed, Deutsche
Bank AG, as the Investment Adviser's new parent company, will control its
operations as Investment Adviser. Bankers Trust believes that, under this new
arrangement, the services provided to the Fund will be maintained at their
current level.
Portfolio Manager. Mary P. Dugan, Vice President of Bankers Trust, is portfolio
manager of the master portfolio.
- -Joined Bankers Trust in 1994.
- - Served as co-manager of the Small Cap Portfolio from 1994 to 1999.
- - Securities Analyst specializing in health care, capital goods and the energy
industries at Fred Alger Management from 1992 to 1994.
- - 15 years of investment and financial research experience.
- - Bachelors degree from the University of Rochester, MBA from New York
University, Chartered Financial Analyst.
Other Services. Bankers Trust provides the administrative functions -- such as
portfolio accounting, legal services and others -- for the Fund. Bankers Trust
- -- or your broker or financial advisor -- performs the functions necessary to
establish and maintain your account. In addition to setting up the account and
processing your purchase and sale orders, these functions include:
- - keeping accurate, up-to-date records for your individual Fund account;
- - implementing any changes you wish to make in your account information;
- - processing your request for cash dividends and distributions from the Fund;
- - answering your questions on the Fund's investment performance or
administration;
- - sending proxy reports and updated prospectus information to you; and
- - collecting your executed proxies.
Brokers and financial advisors may charge additional fees to
investors only for those services not otherwise included in the Bankers Trust
servicing agreement, such as cash management or special trust or
retirement-investment reporting.
Organizational Structure. The Funds are "feeder funds" that invest all of their
assets in a "master portfolio," the Capital Appreciation Portfolio. The Fund and
its Master Portfolio have the same investment objective. The Master Portfolio is
advised by Bankers Trust.
The Master Portfolio may accept investments from other feeder funds. The feeders
bear the Master Portfolio's expenses in proportion to their assets. Each feeder
can set its own transaction minimums, fund-specific expenses, and other
conditions. This arrangement allows the Fund's Trustees to withdraw the Fund's
assets from the Master Portfolio if they believe doing so is in the
shareholder's best interests. If the Trustees withdraw the Fund's assets, they
would then consider whether the Fund should hire its own investment adviser,
invest in a different master portfolio, or take other action.
CALCULATING THE FUND'S SHARE PRICE
We calculate the daily price of the Fund's shares (also known as the "Net Asset
Value" or "NAV") in accordance with the standard formula for valuing mutual fund
shares at the close of
9
<PAGE>
A Detailed Look at the Capital Appreciation Fund
regular trading on the New York Stock Exchange every day the Exchange is open
for business.
The formula calls for deducting all of the Fund's liabilities from the total
value of its assets -- the market value of the securities it holds, plus its
cash reserves -- and dividing the result by the number of shares outstanding.
(Note that prices for securities that trade on foreign exchanges can change
significantly on days when the New York Stock Exchange is closed and you cannot
buy or sell Fund shares. Such price changes in the securities the Fund owns may
ultimately affect the price of Fund shares the next time the NAV is calculated.)
We value the securities in the Fund at their stated market value if price
quotations are available. When price quotes for a particular security are not
readily available, we determine their value by the method that most accurately
reflects their current worth in the judgment of the Board of Trustees. You can
find the Fund's daily share price in the mutual fund listings of most major
newspapers.
PERFORMANCE INFORMATION
The Fund's performance can be used in advertisements that appear in various
publications. It may be compared to the performance of various indexes and
investments for which reliable performance data is available. The Fund's
performance may also be compared to averages, performance rankings, or other
information prepared by recognized mutual fund statistical services.
DIVIDENDS AND DISTRIBUTIONS
Dividends and capital gains distributions, if any, are paid annually. We
automatically reinvest all dividends and any capital gains, unless you tell us
otherwise.
TAX CONSIDERATIONS
The Fund does not ordinarily pay income taxes. You and other shareholders pay
taxes on the income or capital gains from the Fund's holdings. Your taxes will
vary from year to year, based on the amount of capital gains distributions and
dividends paid out by the Fund. You owe the taxes whether you receive cash or
choose to have distributions and dividends reinvested. Distributions and
dividends usually create the following tax liability:
<TABLE>
<CAPTION>
Transaction Tax Status
- -----------------------------------------------------------
<S> <C>
Income dividends Ordinary income
Short-term capital gains distributions Ordinary income
Long-term capital gains distributions Capital gains
</TABLE>
Every year your Fund will send you information on the distributions for the
previous year. In addition, if you sell your Fund shares you may have a capital
gain or loss.
- --------------------------------------------------------------------------------
The Exchange is open every week, Monday through Friday, except when the
following holidays are celebrated: New Year's Day, Martin Luther King, Jr. Day
(the third Monday in January), Presidents' Day (the third Monday in February),
Good Friday, Memorial Day (the last Monday in May), July 4th, Labor Day (the
first Monday in September), Thanksgiving Day (the fourth Thursday in November)
and Christmas Day.
<TABLE>
<CAPTION>
Transaction Tax Status
- ----------------------------------------------------------
<S> <C>
Your sale of shares owned more than Capital gains or
one year losses
Your sale of shares owned for one Gains treated as
year or less ordinary income;
losses subject to
special rules.
</TABLE>
The tax considerations for tax deferred accounts or non-taxable entities will be
different.
Because each investor's tax circumstances are unique and because the tax laws
are subject to change, we recommend that you consult your tax advisor about your
investment.
BUYING AND SELLING FUND SHARES
You can purchase or redeem shares in the Fund by mail, wire transfer or through
an authorized broker or financial advisor. Contact your broker or financial
advisor for details. You may also call the BT Service Center at 1-800-730-1313.
We reserve the right to reject any purchase order. We may close your Fund
account on 30 days' notice if it fails to meet minimum balance requirements for
any reason other than a change in market value. In addition, if your sell order
exceeds $250,000, we reserve the right to redeem it "in kind" with a pro-rata
distribution of stocks actually held by the Fund, rather than in cash.
Your broker or financial advisor may charge transaction fees on the purchase and
sale of Fund shares.
Exchange Privileges. You can exchange all or part of your shares for shares of
another BT Mutual Fund up to four times a year (from the date of your first
exchange). Before buying shares through an exchange you should be sure to get a
copy of that fund's prospectus and read it carefully. Please note also that you
may have to pay taxes on the shares you sell in the exchange.
Account Minimums. The Fund requires a minimum investment of $2,500 to open
accounts, $250 for subsequent investments, and a minimum balance of $1,000 to
maintain them. The Fund requires a $500 minimum investment to open a retirement
account and $100 for subsequent investments, but imposes no minimum balance.
Automatic investment accounts, which credit money from your checking account to
the purchase of fund shares bi-weekly, monthly, quarterly, or semi-annually,
call for a minimum $1,000 opening investment and at least $100 for each
subsequent purchase of shares.
The Fund's Shareholder Guide and Statement of Additional Information contain
complete information on buying and selling Fund shares and maintaining a Fund
account. If you have not already received your free copy of the Shareholder
Guide or wish to obtain a free copy of the Statement of Additional Information,
please call the BT Service Center at 1-800-730-1313.
10
<PAGE>
A Detailed Look at the Capital Appreciation Fund
The table below provides a picture of the Fund's financial performance for the
past five years. The information selected reflects financial results for a
single Fund share. The total returns in the table represent the rate of return
that an investor would have earned on an investment in the Fund (assuming
reinvestment of all interest income and distributions). This information has
been audited by PricewaterhouseCoopers LLP, whose report, along with the Fund's
financial statements, is included in the Fund's annual report. The annual report
is available free of charge by calling the BT Service Center at 1-800-730-1313.
Financial Highlights
<TABLE>
<CAPTION>
For the
period
For the For the For the January 1, For the
year ended year ended year ended 1995 through year ended
September 30, September 30, September 30, September 30, December 31,
1998 1997 1996 19961 1994
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net Asset Value, Beginning of Period $ 15.72 $ 16.79 $ 16.83 $ 12.10 $ 11.72
- --------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment
Operations
Expenses in Excess of Investment
Income (0.12) (0.13) (0.10) (0.07) (0.04)
- --------------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain
(Loss) from Investment Transactions (1.58) 2.13 1.89 4.80 0.42
- --------------------------------------------------------------------------------------------------------------------
Total Income (Loss) from Investment
Operations (1.70) 2.00 1.79 4.73 0.38
- --------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders
Net realized Gain from Investment
Transactions (2.64) (3.07) ( 1.83) -- --
- --------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 11.38 $ 15.72 $ 16.79 $ 16.83 $ 12.10
- --------------------------------------------------------------------------------------------------------------------
Total Investment Return (11.42)% 14.64% 12.35% 39.09% 3.24%
- --------------------------------------------------------------------------------------------------------------------
Supplemental Data and Ratios:
Net Assets, End of Period (000s
omitted) $ 25,497 $49,00(2) $67,385 $ 57,380 $42,737
- --------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses in Excess of Income (0.70)% (0.77)% (0.66)% (0.65)%(2) ( 0.57)%
- --------------------------------------------------------------------------------------------------------------------
Expenses, Including Expenses on the
Capital Appreciation Portfolio 1.25% 1.25% 1.25% 1.25%(2) 1.25%
Decrease Reflected in Above Expense
Ratio Due to Absorption of Expenses
by Bankers Trust 0.39% 0.29% 0.26% 0.32%(2) 0.54%
- --------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate(3) 145% 167% 271% 125% 157%
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Board of Trustees approved the change of the fiscal year end from
December 31 to September 30.
(2) Annualized
(3) The Portfolio turnover rate is the rate for the master fund in which the
Fund invests its assets.
11
<PAGE>
[BANKERS TRUST ARCHITECTS OF VALUE LOGO APPEARS HERE]
Additional information about the Fund's investments and performance is available
in the Fund's annual and semi-annual reports to shareholders. In the Fund's
annual report, you will find a discussion of the market conditions and
investment strategies that significantly affected the Fund's performance during
its last fiscal year.
You can find more detailed information about the Fund in the current Statement
of Additional Information, dated January 31, 1999, which we have filed
electronically with the Securities and Exchange Commission (SEC) and which is
incorporated by reference into this Prospectus. To receive your free copy of the
Statement of Additional Information, the annual or semi-annual report, or if you
have questions about investing in a Fund, write to us at:
BT Service Center
P.O. Box 419210
Kansas City, MO 64141-6210
Or call our toll-free number: 1-800-730-1313
You can find reports and other information about the Fund on the SEC Web site
(http://www.sec.gov), or you can get copies of this information, after payment
of a duplicating fee, by writing to the Public Reference Section of the SEC,
Washington, DC 20549-6009. Information about each Fund, including its Statement
of Additional Information, can be reviewed and copied at the SEC's Public
Reference Room in Washington, D.C. For information on the Public Reference Room,
call the SEC at 1-800-SEC-0330.
You can find information about buying and selling shares in the Fund in the
Shareholder Guide. If you have not already received a copy of the Guide, call
the BT Service Center to obtain one free of charge.
Capital Appreciation Fund CUSIP #055922819
BT Investment Funds STA465300 (1/99)
811-4760
Distributed by:
ICC Distributors, Inc.
Two Portland Square
Portland, ME 04101
